Beware! The Malls are Coming

Shoppers throng Malls during the new year. Shops offer discounts to attract them to the Malls. People compete with neighbours in doing more shopping. No wonder, the International Council of Shopping Centers is upbeat. A research paper published by the Council states: Mall tenants are currently enjoying industry-leading sales, operating margins and after-tax profit growth. Mall rents have also grown. The situation in India does not seem to follow this bright prognosis, however. Leaving aside a few malls of Gurgaon, the picture is downbeat. The 15 football filed big Phoenix Mall in Kurla, Mumbai has one-third of the shops lying vacant. Many builders have deferred plans to construct new malls. Shopkeepers are seeking 1-year leases instead of 7-year leases that was the norm till recently. Many are shifting from high- to low rental malls.

The reason for downbeat assessment of malls in India appears to be competition. Ten years ago shoppers from Delhi would drive to Gurgaon to shop for international brands in air-conditioned comfort. Since them many new malls have come up not only in Gurgaon but also within Delhi and also in surrounding areas such as Faridabad, Vaishali and NOIDA. This has led to dispersal of customers and many malls of Gurgaon are in trouble today. Recession has made things worse. Customers prefer to buy cheap from the regular stores. I have not seen figures for India but the recession appears to have hit working women more hard in the United States. Shopping in the malls is especially convenient for working women who have little time to visit a number of stores spread across the town. Therefore, less jobs for working women is translating into less incomes for the malls.

The concept of mall appears to be stable despite these problems. Increasing population of the cities will increase the demand for free leisure space for which there appears to be no alternative. Question is who will pay for this space? Reportedly 85 percent of the visitors to the malls spend nothing other than in the restaurants. The expenses of the mall reflect in high rentals are ultimately loaded on the 15 percent sales. This makes the goods expensive. Therefore, only those malls are likely to survive who can provide space at low rentals and good services.

The second aspect is cultural. People often buy unwanted things in the allurement of the malls. This is being considered as a disease and named ‘shopaholism’. The customer attains a temporary high having bought an item of international brand as if he has conquered the world. But, of course, the high does not last. It requires repeated bouts of buying yet more of yet more expensive items which inevitably leads to a mental as well as financial collapse except for the richest. Needless to say such buying is a social waste.

Then there is the problem of environment. Malls consume large amounts of electricity in air-conditioning and lighting. Many have walls of glass that require more air-conditioning. Often they do not have sun roofs that would allow natural light to come in. It is necessary to reduce the carbon footprint of the malls to make them sustainable. Roofs can be glazed, and less glass may be used to reduce air-conditioning expenses. Solar panels can be mounted on the roofs and water harvesting can be done. Environment-friendly materials such as fly ash bricks can be used. In this background the decision taken by Akhilesh Yadav, unfortunately since rescinded, to close malls at 7 pm was to be welcomed. At the least, malls should be required to pay 4 times the normal rate of electricity during peak hours to prod them to conserve energy.

The concept of mall is there to stay. They provide urban space for socialization for which there appears to be no alternative. The present distress is more due to global recession and domestic competition. These issues will settle down after a while. Action is needed on two fronts. One, there is need to formulate and advertising-cum-consumer policy. Consumption is good if it acts as a stepping stone to higher objectives of life. It is a trap if it promotes evermore consumption. Advertising should be made subservient to this higher objective. Secondly, there is need to make an environment policy. The rich who can pay for the facilities of the malls do not have the right to destroy the environment of the poor. Malls should be required to adhere to certain norms of electricity usage, water conservation and carbon footprint in construction.